tv Fast Money CNBC January 22, 2013 5:00pm-6:00pm EST
earnings. that's what we have for tomorrow. >> yeah, absolutely. we have to watch for the guidance. >> exactly. >> very important. >> last, but not least, anthem, 30 seconds. >> i'll be watching for apple's reported earnings and revenue figures as a key barometer of general economic health. if apple reports revenue earnings that are below the analyst estimate of $54.7 billion, that's a market that might see market inflation. given that gold performs best when interest rates are negative, any extension of that policy is very bullish for physical gold and silver bouillon prices. >> all righty. thank you, gentlemen. >> thank you. >> we'll see you later. thank you for your insights for tomorrow. ron is right, we probably will see a bit of a rally in technology tomorrow. google's earnings, ibm's earnings, both in many cases better than expected, especially ibm. >> the stocks both higher by more than 4%.
google higher than 5% in afterhours tradings. so, if that continues tomorrow, remember, ibm is a dow component. that's going to bode well for technology, maybe the overall market. >> that does it for us. thank you for joining us. >> "fast money" has full coverage of speaker boehner's press conference, starting right now. live from the nasdaq market site in new york city, i'm melissa lee. afterhours action from csx to google and ibm. we're covering it all. apple angst. will the tech giant dliceliver e tomorrow? and how a south african company is pushing the u.s. closer to energy indedense. first, we have to get straight to our top story and that is markets. the s&p reaching five-year highs, the dow having its best january in 16 years. buyer or seller? pete, pit boss, what do you say? >> i remain a buyer of the market, but i've been shifting around my portfolio and that's because this has been an
unbelievable move to the upside. we're in earnings season. it's been very strong so far. ibm tonight and google tonight. we're going to be talking about those in a few minutes. those numbers were spectacular. the reason i'm starting to shift things around, i'm taking off stock positions. volatile tills are very low. that givens me an opportunity to be there and take that risk off the table, try to put that capital back in the pocket and wait until we see, because i do think we'll see a pull back. >> what are some of the stocks you are using the replacement strategies? >> research in motion. almost everything but apple. >> take a look you a futures too. we're watching the news have an impact on the qs, probably on the s&p 500. in terms of the bull case, tim, i know you watch the transports, the fifth consecutive -- >> west side highway. the douw is -- we're here. you've got this confluence, which people will say is a great place. i would look at a lot of things
that, to me, we're getting on the macro and the micro side. you know, german confidence is up. housing numbers today were weaker and boy, we're disappointed because we're back to october' 09 in existing home sales. you have the congress, basically, we're talking about pushing out the debt ceiling three months. you are freeing up a run way here where earnings if they are okay, macro is settling in. what we heard from freeport, bhp, all the guys looking around the world are seeing this growth. when you combine it with bank of england today, saying, we're going to give you more stimulus, fed basically saying, we're still in play, what more do you need? >> but if we are just pushing the debt ceiling, are we just kidding ourselves? the same issues -- >> but we're traders, so -- >> true. >> i'm hopeful it is a sign it won't come to this brinksmanship. i hope that's the case. because that leads, i think, to
not the best outcome. whatever you can pull together at the very last minute. so, i think that's kind of a positive. i, like pete, i want to stay long, but with the volatility index here, i think you have to buy some relatively cheap protection. >> so, you are a buyer but with protection. >> yes. >> we talked about the dow having its best january in quite some time. look at the components that have lead us higher, that have gotten us to this point. hewlett-packard, the best dow gainer in the month of january, up 20%. travelers, big gain today, up 9% on the month. caterpillar, up 7.5%, nice diversified basket. >> it's got to encourage you a little bit. the stock closed positive on the day after opening down buck, buck and a half. it think caterpillar is interesting. hewlett-packard, we thought we saw copitch lake, we turned out to be right, that stock continues to perform. if you ask me what i'm thinking, without giving it away, i still think this s&p continues higher,
i'm with people and karen and with the hash tag smooth to my right. >> four buyers of the market. >> you have to, just to hedge here, the market feels exhausted. there's a lot of market timers that are coming up with a lot of sale signals here. people that are looking at market timing and exhaustion points are saying, we may be exhausted. >> some of the groups that have really been, a powerhouse last year, powerhouse this year, the xlf hitting freak 52-week high. mainly on the strength of the insurance sector. we saw allstate go higher. are you still in xlf? >> i am in specific names. we should talk about, i think it's very name specific right now. we heard from intel last week and saw the reaction there. and then you look at the rest of the chip sector. we've seen positive reaction since. so, it is still very stock specific. if you are looking at the xlf, there are the investment banks. they are trading extremely well.
morgan stanley, goldman sachs. but i think there are names in that sector that are working and certainly the beta names are the names i've been putting myself into. >> quickly, one more name in that space and i know pete has blackstone. look at that today. first time it's been over 18 in i can't tell you how long. blackstone continues to perform. that stock's another one to watch. >> all right, so, four buyers here on the desk tonight. what could propel this market higher? results out of ibm and google, both shares are trading higher in the afterhours session. for ibm, a beat on the eps and revenue. this is the first in five quarters, i believe. we are seeing the stock trade higher. google, same thing. confuse ion on the numbers, butt was a beat, when it was all said and done. ibm up in the afterhours session. >> ibm as a stock has been stuck, the 196 barrier has been trading, it's pushed through that in the afterhours. when you look at the numbers, i don't think this is about a sales growth, it's about the
margin growth. their software business is working. and this is where it's going. software sales are up 3%. the emerging market part of their business is growing, if you look where they are grow, latin america versus america, it's not more, but it's stealing more growth. same with asia, this is exciting for ibm because this is where the software seams can really grow. >> when you get a revenue beat and to tim's point, 52.3% on the gross margins. revenue and margin, that's a good sign for ibm. a name we talked about for a long time. it's floundered in the last couple of months, but really now it needs to get above whatever that all-time high was, north of 210 for the mow men item to continue. >> there were questions if ibm could sustain 10% eps growth given that it has fewer leavers to pull. mike khouw, i'm wondering in the options activity, any indications on where it could go over the next, you know, week or so? >> you know, it's interesting, because there was some bullish active till certainly in google, but there wasn't so much in ibm.
they were mostly just trading tight strikes. right around the 200 strike calls was actually where they were playing it. it wasn't a huge, huge move and it looks like they might be getting just enough for a break even. this is pretty much what the options markets were expecting, you know. the google play, it's interesting, people were buying the 750 calls and we haven't quite gotten there. those expire on friday. we still have time yet, though. >> we want to go to jon fortt. he's been monitoring both calls, a very busy and talented man in the afterhours session. jon, what's the latest? >> i got two ears. let me talk about ibm first. really impressive in a couple of areas. one in the bricks. they were up 14% revenue-wise. asia particularly strong overall, up 5%. constant currency there. u.s., pretty much flat. but the real areas where they seem to outperform, software, which helps margins. they are very strong in middle
we ware there. also, hardware. not really the standout. not the division that you necessarily think of when you think of ibm. it did better than expected. when that happens, that helps ibm. on the google call, interesting that we saw paid clicks not grow as much as expected. cost per click do better than expected. google said, we did that on purpose. we did some tweaks in the way we are presenting ads, that brought down paid clicks. and boosted cost per clicks. we say that's better for users. investors happy about that. they were concerned about double-digit costs. that has now stopped. also, i mention larry page, his voice still doesn't sound good. google hasn't said the issue, but his voice doesn't sound good. he sounded like he was laboring with his breath as he was talking. >> that's interesting. >> he's got the flu, man. >> he's had that voice issue for months now. that's a long flu. >> i said maybe he got -- that's very sensitive on my part. i feel bad. we should have gotten the
shot -- >> i didn't get the shot. >> maybe we can get this done on air? >> wow. >> mel's shot? >> seems to be an outcry. i read twitter. >> really? you want to see me get a shot on air? that's sick. >> they want you healthy, though. >> very sweet of you all, all of you who want me to get a flu shot. pete, google. >> the web ad revenue being up 18%, that's impressive. the paid clicks, jon fortt talked about that. google impressed the market. a lot of people, because of last quarter's results were really looking forward to what can they show us now in the mobile market and i think they showed us, they're competing very well in the mobile market. that's adding to what have been able to do for so many years previous to this. and it shows you that the ad revenue is starting to come back, showing a little bit more support of names like google, obviously facebook is another. >> karen? >> well, i'm long google, i like google here. i don't think the valuation is particularly expensive. it makes me wonder if this is positive, negative for facebook, do they look at it as market
share gains, potentially? or is it a -- ability to monetize -- >> that would be my read through. my read through would be that suddenly facebook can say, look, they are monetizing mobile. we already showed you we were able to do it last quarter. we can show you something more this quarter. >> yeah. facebook shares are slightly higher but this is after a 3.6% gain in the regular session. we are awaiting house speaker john boehner to deliver his first news conference. when that happens, we will bring that to you live. we're on the google conference call, also the ibm conference call. all the developments. we are watching both shares pop afterhours. and apple's new numbers less than 24 hours away. a look if they can reassure the street. plus, the biggest movers in today's session. more "fast" straight ahead. if you think running a restaurant is hard,
welcome back to "fast money." transports have been on fire. the dow jones transports hitting an all-time high today. two of them reporting this afternoon, csx reporting earnings that topped expectations. revenues were slightly better despite the fact that the company said its coal shipments, the fact you're not seeing a lot of shipments really hurt results. however, they had strong results when it came to shipments of autos and chemicals. same story, more or less, for n norfolk southern. also complaining that the coal outlook remains pretty weak. they said auto, merchandise were strengths. melissa? >> thank you, bertha. first of all, you go to the coal. csx, as bertha mentioned, said they saw an increase in those shipments, but those gains were offset by the declining coal
volumes they were shipping. coal being a very high margin line of business. pete, is this anything that we did not know? >> no. >> okay. >> and i think it's something that we've been looking at for a long time. how are they going to make up for the coal that they're actually losing? and that's one of the biggest things that they're shipping right now. but the intermodal is where they are making up for it, the chemical and autos. ksu reported that this morning, that's where they really made some inroads. these other two don't quite have the same exposure levels as ksu. >> and the other read through, as we mentioned, the fifth consecutive record high for the dow transports index during today's session and really the component of that index leading the charge here, airlines. if you go into the airlines index, that's really been a monster so far this year. i don't know if you are -- >> we've been investors in airlines in other parts of the world. if you look at what these guys are able to combine in terms of cost efficiencies and their load
rates, these games have never been clicking so efficiently. and quickly back to the rails, if you look at a name like csx, what i still think they have going for them and the reason why trannies are going higher at least in that space, is oil on rails, things where people have priced in too much pain. that means these guys had some room to run. in csx's case, it's been a nice rally back. you have to take a breath here on the numbers. >> i think for the airlines, which i just hate in general, you have a creeping headwind in that oil prices have really ticked up higher. not in a -- not dramatically, but over time it has. we're looking at 96, 97, wti and 112 on brent, this is going to start to be a problem for the airlines. >> kansas city southern, bertha mentioned two rhames that were up reasonably well. ksu up almost 5% after being up over the last couple of years.
we've talked about this name. i'm not saying go buy kansas city southern tomorrow, because as you've seen before, the stock pucks back and it has fits and starts. but ksu, if you want beta in the rails, ksu is your name. >> let's hit pops and drops. a drop here for deutsche bank, down 1%. tim? >> some fear that the banking regulatory in germany is going to split it into two entities. this is a chance to buy it on weakness. >> a pop for regions been s s f? >> good enough to get the stock higher. we're sort of at the top end of the range. but i do think it has another day or two left. >> pop here for research in motion, up a whochi iwhopping 1. pete? >> this name has been on fire, this and nokia, far in front of the apple story. but this is more about the strategic partnerships or stay treejic opportunities in front of research in motion that were alluded to by the ceo that absolutely talked about unlocking some of the value. this stock is going higher.
>> pop for ches speak, up 5%. karen? >> one of my favorite management teams of all time. >> right. >> sarcastic. >> what? >> sarcastic. >> yes. nat gas is moving higher. it is cold, cold, cold out there. >> drop here for netflix, down 1%. mike khouw? >> yeah, a lot of scrutiny over their earnings coming out tomorrow. 13 cents a share losses is what the street is looking for. i don't think that's the story. net subscriber ads and looking at the rising costs and the international expansion, but the valuation is just to reich for me. >> and we have a pop here for the biebs. >> huh? >> reaching a new milestone cede. he is now the most followed person on twitter, surpassing the former titan, lady gaga. bieber has now than 33 million followers, only a shade than the entire population of his native canada. in comparison, barack obama has 26 million followers and the
pope's got 1.4 million. >> what does that tell you about society, about where we're headed? >> pathetic. >> as a planet. you get out there -- you get out there on the twitterverse, wham. >> not for me. >> 25 million, right off the bat. you'll be in bieber category. >> by the way -- guy tweeted me today that he was excited that new kids on the block are going back on tour. >> and what's the problem with that? >> nkotb. >> jerk. >> hanging tough, new kids. coming up next -- getting america off foreign oil. a look at cutting edge projects that banks on natural gas and how you can trade it. but first, take a bite into apple. less than 24 hours before it reports earnings. we get the 411 on the struggling stock. much for "fast money" ahead.r ce and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online
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>> yeah, melissa, coming in with earnings of $4.25 a share. the estimate had be $4.04. revenues topping over $609 million. the estimate had be $584 million. they make these surgical robotic gear and that's been an area that's been under pressure because folks have been trying to cut back on procedures. but they saw overall procedures were up 25% and they are also raising their full year outlook for revenue, gap revenue of 16% to 19% growth, up from 17%, expectation. melissa? >> this is better than expected, because in part, prostate procedures have been down. >> all the different -- >> general surgery was up, that offset the weakness. >> incredible device. it's a device that you can almost measure the company a lot by how they are able to show what their growth projections are right now and they are extremely bullish. says a lot about the company.
bertha alluded to it. they talked about the growth. this is a name you are talking about, about 30 on the p level right now, especially when you look at where it is in the post market, up $43. probably a little expensive. wait for a pull back. >> let's talk apple. reports its december quarter results after the bell tomorrow. time to take your position on apple. let's bring in rocco pendola. you say do not buy apple ahead of these earnings and yet you are a short-term bull. reconcile that for me. >> yeah, it's a good question, it's a fair question. i think that unfortunately the investors will not, or traders, i should say, should be in this stock. i'm saying go in it. if you guys are nimble like the people on the panel here and you can get in and out of the stock and protect yourself properly, do it. most people can't dot that, though. so, as much as i think they might blow it out tomorrow, anything can happen. i don't think long-term investors need to be in such an anxiety driven stock that's driven by headlines that has
unrealeistic expectations right now. >> but rocco, if you're a long-term investor, you're not focused on headlines, you are not focused on the noise. >> exactly. and it depends on where you are right now. everyone is going to be different. when did you buy? have you taken any profits yet? everybody is going to come into this differently. what i'm saying is, don't go in tomorrow before earnings and buy this stock to start a new position or think you're buying on a dip. i don't think that makes any sense. because even if they blow it out, even if they do over 50 million iphones for the quarter and it looks like they might based on verizon's numbers, it doesn't mean the stock is going to go up right now. why worry yourself at all? if this thing takes off, if it becomes the darling of wall street again, if there's a bunch of upside to be had, you'll have time to get in when all this noise and hysteria blows over. if you are an investor, why bother? look at news corp. and disney
and time warner, they blew apple out. >> rocco, it's karen. i got to ask you something. so, if you're a long-term investor, who already owns it, should you sell it before tomorrow and then buy it back later? >> that's what it sounds like you're saying. which doesn't make any sense to me. >> it depends on your situation. everyone's different. everyone is going to have a different cost basis. when did you buy? >> why is the cost basis relevant? >> it's never relevant. >> it's incredibly relevant. >> only to taxes. >> it's relevant from a standpoint of, what's your profit target? when do you think you should be out of this thing? tomorrow really shouldn't be a factor. at the end of the day, if you reached your profit target and you want to get out, great. >> i want to get the bottom line here. you are saying longer term you are concerned about apple's prospect but if you are a long-term investor, you should what? own apple or not? >> the bottom line is this, melissa. it's a great stock to own
long-term. it's not a great stock to get into to start a new position in right now because all of the noise and all 0 the headlines that drives what happened in this thing. >> is it priced fairly? is there an attractive value proposition? these are the things you should be thinking about. >> absolutely. absolutely it's priced fairly i mean it's not priced fairly. if you look at amazon, we give amazon the benefit of the doubt with a 3,000 p.e. and i'm fine with that. i think they're going to execute its long-term plan really well and we don't give apple even close to the same type of benefit of the doubt? i mean, absolutely it should have a higher valuation, but again, i don't know if any of this really matters. i don't think people should be in this stock right now. >> we have to run, rocco. okay. fair enough. >> thank you, rocco pendola. okay, i want to address one thick, because -- >> do it. >> cost basis. >> i don't believe cost basis matters at all. >> every day you own -- >> but for your consideration of
taxes. >> it's certainly, to me, a case where i get what he's saying is that apple is, first of all, the street was upgrading at the top, they are downgrading what people think is a short-term bottom and you have to -- you have to weed through the merits of the investment process. this is a very interesting time to do that, though, because, again, you have a company that's going to show probably record earnings tomorrow and a stock that's been beaten up. i own this stock for a trade and i think apple has very good days ahead and in the short run, the stock can go 550. >> let's go to our special guest, who is waiting on the fast line, the one and only gary kaminsky. gary, what do you have to say? >> good evening all. good points in terms of cost basis. now i know where all my hair went, looking at rocco there. we answered that question. now, listen, let's talk about lagging indicators and you guys all know what coincident indicators are. let's look at apple in october
10th. it was that day, melissa, you probably remember, we were able to report out it was at that point, you could see every one of the 50 largest closet index had gotten up to a waiting in apple in the previous couple of months, august and september, to get to that nasdaq level waiting. coincident indicator. at that point, you saw apple start to start this steady decline. it's very simple. when you don't have the incremental benchmark hugger closet index buyers, it doesn't matter how many iphones you sell, how many i pads you sell, what the profit margins are, because those are the increment alibi al buyers. the company, and karen will definitely have an opinion on this, has to say something tomorrow about the cash that will find the incremental value buyer, who is a bunch mark hugger or a closet indexer in the value space. because right now, the growth
funds, they own enough apple. the value funds don't. if they do something, melissa, with that, say a $50 billion buy-back, not saying, announcing a buy-back, but saying we're going to buy back shares between now and the end of next month, those value end deck buyers will buy it. that's the catalyst. >> right, right. i like that analysis in terms of the value versus the growth buyer. they did an analysis, more value funds hold apple, but the question is, if they do a buy-back, will that attract the value investor or are they better to do a dividend? >> my opinion, right now, based on who owns the stock, the answer is the value and the buy-back. because those buy-back buyers will take the new earnings for share, even though it may seem silly, they'll say the stock is trading at a lower p.e., given less shares outstanding. that will be a better catalyst than the growth and income invels or the who buys on the dividend. that's just based on the shareholder, the basis of the shareholder layout now. >> gary, good to speak with you.
gary kaminsky. karen, in terms of what they can do with their cap -- >> i don't think it's silly. if they buy back stock that isn't creating to the extent they earn more than zero on the cash that they use to buy back shares. they absolutely should do it. they've done a motherabhorrible capital allocation. however, i'm not optimistic that tomorrow they decide they have to do it. >> okay. all right. programming note here. be sure to catch gary when he goes "inside the s.e.c." as part of cncnbc and our new series. is a major company getting ready to help dell make a deal? plus, the specs on the project that converts natural gas. and later on, two of our trader
microsoft is going to help dell make a deal. our own david faber reporting this afternoon that microsoft is in talks with silver lake to invest between $1 and $3 billion as part of dell's buyout. talks are jog gone and a deal could be reached at the end of the week. so, we asked, fact or fiction. karen, what do you say? >> i do believe it. microsoft has tremendously deep pockets and faber's done a great job here. this is what he's hearing, they're in some sort of a preferred position, that's a better return they can get, so, i'm going to go with fact. >> the other thing at work here is that obviously microsoft like so many tech companies has a lot of its cash domiciled overseas. and according to tax experts, microsoft could use foreign cash to finance this deal as long as it doesn't take a stake more than 25% for dell. mike khouw, i'm curious in the options markets because david faber is reporting $13.50 to $14. where do the options pan out?
>> it's interesting, the most active options were the february 14 calls though the 13s followed closely. very bullish. over 140,000 calls traded versus just about 56,000 puts. we have been seeing an increase in the amount of bullish activity in dell generally and we have been seeing institutional players taking big bets, looking at selling longer dated premium, trying to use that to take advantage of a deal near term. >> pete, time to get off this dell train if you are been riding this thing? >> i think so. i think you've got what you were looking for out of this. this has been an absolutely incredible run to the upside, once you've got through this level, there's not a lot of meat left on the bone. time to exit. and to mike's point, a lot of calls trading today but those are against monstrous open interests to the upside. that could be some of the covering, as well. i think this trade's over. >> let's talk energy. energy independence. one company is leading the charge.
they are building the first u.s. plant to convert natural gas to liquid feels. andre derader is a senior executive at sasol. great to have you with us. >> thank you. >> watch through this math. a lot of analysts are calling this a very ambitious project. at what price does nat gas have to be at, to sell that diesel at the end of the day, when you get up and running in 2018? >> we aim for a return on our capital of 1.3 time weighed average cost of capital. at gas at five bucks and oil at about 95, it still makes a lot of sense for us to make that investment. now, today trading at 112, gas is sitting at $3.50. the math makes a lot of sense for us to invest. >> and in terms of it being economical at all, the louisiana, the state where you are building the plant, is kicking in a lot of subsidies.
would it still make sense? we heard about so many alternative energy sources and energy sources that only make sense when there's some sort of subsidy in existence. >> absolutely. we've been doing this for the past 60 years. we have a gas to lick kids plant running in qatar today, producing diesel that is sold in the market, same technology. this is not experimental. this is not new, it's proven, it's tested and the subsidies we are getting from louisiana just makes it that much more attractive. >> gas to liquid right now only accounts for less than 1% of global diesel demand. how do you see that changing when you are up and running? this plant could potentially produce, what, 96,000 barrels? >> correct. it's still only a drop in the ocean. the world consumes 88 million barrels of oil per day, so, we manufacture 100,000 barrels, that's a small contribution. >> tim, you have a question? >> yeah, andre, in terms of the cost here and the gearing and the concerns people have at what point this is profitable, i think it's putting pressure on
your stock in terms of the overall dividend policy. you guys seem to be very committed to a good dividend policy and the offsetting part of that is, the cash flow is fantastic because it's stayed weak. which of these is a more powerful force in what you think the cash flow is in the short to medium term? >> i think we've gone out repeatedly and reassured the market that we will still with our progressive dividend policy and we will maintain our dividend dive difd dividend no matter what happens. we have an ungeared balance sheet. so, we think we have the capacity to do that and we recently issued a billion dollar u.s. dollar bond, which was oversubscribed by 3.5 times. so, we think there is adequate appetite in the market and we think we'll be able to raise the funds to build these projects. >> all right. and then, andre, of course, the
question is, the more nat gas is going to be used, puts pressure on pricing overall. how do you model in, if you are going to produce 96,000 barrels by 2018, whenever, how that will impact the price of nat gas to the upside. >> we don't think it will ever significantly impact at all. >> really? >> the total u.s. gas market today is 17 billion cubic feet per day. we will consume 1 billion cubic feet per day. so, it's a relatively modest contribution and we don't think it will play a major role. >> okay, andre, thank you for coming by. really appreciate it. tim, i know you've been in the name. you certainly looked at the name. are you a fan? >> we think it's a very, very well run company and we think these guys are certainly, from a technology perspective, at the front of the line. this is something that we've been very interested in over the years. the valuation is undemanding. it really is the capital, dare i say, destruction that concerns people. clearly north america is a huge
option. bum so far, it's been a bit of a hit on operating performance. i think the company is very attractive here on a valuation. i think long-term these guys are in the middle of a very exciting space. >> one of the things you mentioned and pete speaks to this all the time. look at the specialty chemical names, pete's talked about eastman, west lake company, huntsman, a name you talk about, these are names we've talked about for quite some time, but those names continue to work. >> okay, got to take a break here. coming up next, we continue to monitor the afterhours action. the latest from google and ibm's conference calls and one stock, two opinions. a good old fashioned street fight. that's straight ahead. ♪
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welcome back to "fast." ibm still trading higher in the afterhours session. bricks were strong, asia was up. u.s. was flat. software particularly middle ware was strong and ibm had posted five consecutive quarters of a revenue miss, until this quarter. so, we see the stock up there. take a look at google, as well. google posting strong results though the revenues came in a little bit light. the stock is higher by 4.9%, helping to juice the qs.
take a look at this, how we are setting up in tomorrow's session on the qs and we are seeing an impact there. they are trading higher. let's talk free port, the world's largest publicly trader copper producer in the world. beating bottom line estimates on better than expected copper sha sales. with e have got a street fight, though. guy is our bull, tim, our bear. you each have 30 seconds to make your case, because otherwise you'd be really long winded. guy, kick it off. >> i'm going to save some time for tim because he enjoys -- we talk about, when we made the announcement, we said, that was going to be the capitulation bottom in the stock. not unlike years ago when they acquired welch dodge. they paid just exactly what i think they needed to pay. the same thing that's happening here. this is not just a copper company. it's a gold company, as well. a lot of people don't give them credit for. the valuation is fair.
and i believe as this broader market rallies, it's going to drag up fcx. we've seen a significant move, but i think there's further upside in the stock. >> i'm bullish about their copper market, which is why i'm very disappointed this company has basically thrown in the towel on being a dedicated copper and gold company and now going into oil and gas. they will wreck a lot of capital. there will be no special divs. a lower valuation if you are a production company. it's warranted where as with a copper company, where i think there's going to be significant supply disruptions and i think these guys were best positioned, they are basically diversifying. they are run away from emerging markets, they had big problems in indonesia and purr rue, going back into the u.s. that's a low grout strategy, one that's fraught with a lot of execution risk. show me. it's rallied 18% off the ground and it's up about 9% since that time. you got back your little bounce off the bottom, now you're kind
of stuck in no man's land and i think it's a great, great company, but their strategy to me is very concerning in the short to medium term. >> that's what makes markets. >> good thing guy ceded his time. >> i actually had manager to say. >> hey. that's hurtful. words are like weapons. they hurt sometimes. >> they are. >> cher said that. >> cher said that? >> pete, it seems like it comes down a long the lines of, what you want to investment. it's a diversified company now. >> i think freeport's management has shown us they have done an unbelievable job, to guy's point, the fact, the previous acquisiti acquisitions, now this one, getting themselves into oil and gas. if i want a pure play, tim, i'll take southern copper. i don't like freeport, southern copper actually reacts far better than freeport has. that's your pure play. if you don't want it and you want diversify case -- >> who won? >> oh, i think guy won, because i think the diversify case is the reason why this stock does
go higher. >> okay. >> no winners and losers -- >> not everybody gets a medal. >> that's true. excellent point by you. >> yes they do! >> not everybody gets a medal. >> hard line, mel. way to go. nice lipstick tonight. >> thank you. >> you're welcome. >> want to go to mike khouw. unusual options activity. does it indicate who might be the winner or loser? >> it's pinning the medal on guy here. it's really interesting. usually we take a look at options activity before earnings come out. in this situation, we had a lot of activity immediately afterwards, it was interesting, the market was die guesting the news, we saw a lot of call buyers on the 35 strike that expires this friday. people spent 30 cents on these things. made 50% on the money on the close. we saw a lot of the february 35, 36 and 37 strike calls. bullish bets being made. net of their earnings. >> karen? >> i have to go with tim. >> all right! >> even if the whole market goes up, it will go up with it, but
you know, when you diversify into something else, i think you end up getting the lowest common multiple. >> why did it go down 15% and you are going to ann earea whera lot of capital is wrecked. there's no synergies here. these guys are moving into lower growth. >> they have knowledge in the space. >> i love copper. >> for now -- for now, guy is the winner, by pure numbers and votes, but the market may prove you right in the end, tim. >> correct. >> that's why this game is so fun. >> that's why it's a great -- >> better copper place. coming up, we're going to take a look at whether to hold or fold two stocks. and, our traders answer their favorite tweets of the day. we answer the questions. more "fast" straight ahead. ♪ [ cows moo ] [ sizzling ]
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awhile. we started talking about in late november where we thought this is what's going to happen in terms of the s&p. what i believe is the s&p is going to trade up. trade somewhere between the march 2000 high and the july 2007 high, as you can see here, comes in somewhere, just call it for sake of argument around 1550. i still believe we have another 70 or so s&p handles to the upside. i think the market will exhaust itself there. i think it will coincide. we have another chart. it will coincide with the vix trading down, which pete can speak to. and treasury yields trading either side in 2% in the ten-year. another 70 handles to the upside in the s&p. it will coincide with the vix down either side of 12 and with the ten-year treasury either side of 2%. that will be the top in the s&p. that will be the bottom of the vix and in terms of yields, the high in the yields. >> safe to go up to 1550-ish
level. >> we've had every opportunity to sell off in the s&p in the next couple of weeks and it doesn't want to do it. we're probably going to open higher again tomorrow. i know what the technicians will say. i think the market is going to overshoot to the upside. that's what's about to happen here. >> tim, what do you make of guy's analysis? >> i think we're in a place here where earnings are giving you what you want. valuations don't seem terribly stretched but people say the charts look difficult. i think people made a very good point. he's doing this from a product perspective, we're doing it through rotation and what we're finding is there's been a lot of beaten up dogs that actually look very interesting and mostly because, in fact, they were pushed due to market volatility due to growth expectations that people could not discern. we've got a lot of clearance from people like freeport, even bhp in terms of iron ore production. rotation to underperformers continues to work. >> and pete, in terms of the
vix, guy makes a point, 5 1/2 year lows, five-year high s in the s&p 500. >> we could see ten, but i wouldn't want to have to guess and wouldn't want to have to try to pick the bottom of the vix. >> quick question on that? karen talked about owning puts, saying, why not, because they're so cheap buzz people have been destroying put premium -- >> if it allows you to be long. >> isn't that throwing money out the window? >> depends if you consider insurance policies throwing money out the window. i would put it there. >> you tweet it, we trade it. the trade eartrader's best twit questions of the day. >> this is fun. >> will be fun. karen, start off with you. >> go ahead, tweet me. what do you got? >> trade or fade asks, do you still like mhp and pacd? >> ah, yes, to both. mph, i really like. they are hopefully very soon going to close the education business. and i think there's still meaningful upside. we are long every share we've
had of mhp. pacd, long every share there, as well. >> next tweet goes to guy. george tweets, with market volatility, does it make sense to sell covered calls on big moving higher and buy back on dips? >> george farkas. i would say we sort of discussed this, but given the fact where the vix is, i don't think it makes a lot of sense. you're not getting paid enough to do it. the better play is probably to buy put protection, go the other way. instead of earning that synthetic dividend, use the fact that the vix is down here to buy puts protection. >> all right, first move tomorrow when we come right back. stay tuned. try running four.ning a restaurant is hard,
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